People have asked me why they cant track SIG warchest funds and inflows on Solscan. The Warchest is kept in a bank in bitcoin. Investers who are members of SIG contribute to that fund. It takes a while to initiate a "number go up" run because two bitcoin transfers are involved. The secrecy process is described below. This is how the truly rich maintain their privacy on a supposedly transparent blockchain.
Technical Overview of SIG Secret Internal Transfer
1. Wallet Setup: You have two wallets on the same machine, Wallet A and Wallet B. Wallet A contains both Bitcoin (BTC) and Solana (SOL), while Wallet B, a custom wallet written in Python is dedicated to SOL transactions.
2. BTC to SOL Conversion: Using Wallet A, you initiate a transaction to exchange BTC for SOL through a service like Changelly. Changelly processes the conversion and sends the SOL back to Wallet A.
3. Internal Transfer Mechanism:
- Wallet A: After receiving the SOL from Changelly, Wallet A performs an internal transfer. This means the SOL is moved from Wallet A's internal address to Wallet B's address without broadcasting the transaction to the blockchain.
- Internal Address: Wallets have both external (public) and internal (private) addresses. Internal addresses are used for internal operations and are not visible on the blockchain.
- Transaction Privacy: Since the internal transfer doesn't involve a blockchain transaction, it remains invisible to external observers, including Solscan.
4. SOL Transactions from Wallet B: Once the SOL is in Wallet B, you can use Wallet B for SOL transactions. These transactions will be visible on Solscan, but Wallet A's involvement will remain hidden.
Benefits of Internal Transfers
- Privacy: Keeps the source wallet hidden from public view.
- Efficiency: Reduces the number of transactions on the blockchain, saving on transaction fees.
- Security: Minimizes exposure of wallet addresses and transaction history.
Example Scenario
1. Wallet A (BTC + SOL) -> Changelly -> Wallet A (SOL)
2. Wallet A (SOL) -> Internal Transfer -> Wallet B (SOL)
3. Wallet B (SOL) -> SOL Transactions -> Visible on Solscan
